Federal Court Upholds Arizona Simulcast Signal Equality Law

A bid by The Stronach Group (TSG)'s simulcast signal brokerage company to keep the Arizona Department of Gaming (ADG) from enforcing a law requiring companies that provide off-track- betting signals to sell them to anyone in the state who wants to buy them got stymied by a federal appeals court ruling Aug. 20.

A three-judge panel for the Ninth Circuit United States Court of Appeals affirmed an earlier district court's denial of a preliminary injunction in a lawsuit challenging whether a relatively new state statute or the federal Interstate Horseracing Act of 1978 (IHA) should take precedence in the dispute between TSG-owned Monarch Content Management, LLC, and the ADG.

According to Capitol Media Services in Arizona, the basis for the case dates to 2018, when the newly reopened Arizona Downs sought access to Monarch's menu of simulcasts, which include TSG tracks and other popular winter signals like Tampa Bay Downs. Monarch initially agreed to send its signals to the track itself but refused to do business with the Arizona Downs OTB sites, presumably because three of them (at that time) were in the Phoenix area, where they would compete with OTBs controlled by Turf Paradise.

Capitol Media Services reported that last year lawmakers “voted to force Monarch into that all-or-nothing situation: If it wants to do business with Turf Paradise, the law reads, it has to provide the same signals to anyone else who wants it.” It also gave the state racing commission the authority to review simulcast contracts to determine whether fees are “excessive or unreasonable” or the terms are “anti-competitive or deceptive.” Monarch and co-plaintiff Laurel Park then sued to block that law.

According to the court opinion authored by Judge Andrew Hurwitz, the panel held that the plaintiffs, “had not shown a likelihood of success on the merits of their claims. The panel first held that that the IHA, pertaining to interstate horse race wagering at off-track sites, did not preempt [the state law]. The panel determined that on their faces, the IHA and the Arizona statute regulated different actors and activities. The IHA did not address how the states can regulate simulcasts, and the Arizona statute did not address Laurel Park's statutory right to consent before interstate wagering on its races could be conducted. Thus, it was not facially impossible to comply with both laws. The panel further rejected plaintiffs' argument that [the state law] frustrates the intent of the IHA.”

The judgment continued: “The panel assumed arguendo that Monarch's simulcasts were expressive in certain respects. The panel held, however, that the Arizona statute did not regulate that expressive content, but rather only Monarch's conduct-the “offer” to sell simulcasts to live-racing permittees and OTB sites. The statute's requirement that Monarch must make simulcasts available on equal terms was plainly incidental to the statute's focus on Monarch's non-First Amendment business practices.”

Tom Auther, an Arizona Downs owner, told Capitol Media Services that he is treating the ruling as a victory. But the judgment won't automatically give his track or OTB network access to the Monarch-brokered signals, because Monarch chose back in January to cease selling any signals to Arizona entities.

Both Arizona Downs and Turf Paradise have called off their 2020 race meets because of the COVID-19 pandemic.